Additional borrowing will help City of Swift Current to fund capital projects
The City of Swift Current will be borrowing close to $5 million to fund some of the projects in the 2019 capital investment budget. Councillors approved a motion at a regular council meeting on April 22 to advise the public of council's intention to consider a borrowing bylaw for financing within general government and utility operations.
“In a perfect world it would be nice if we didn't have to have any debt,” Councillor Ron Toles said during the discussion.
He noted that the borrowed money will be used to fund capital projects that are necessary and have to be done.
“There's very little on that list of things that are not essential items,” he said.
The City will be borrowing $4,993,877 to fund various projects in the 2019 capital budget. This additional debt will mean there will not be a significant change in the City’s debt load by the end of the current year.
The City’s principal amount of debt for general government and utility operations was $60,766,828 on Dec. 31, 2018. After the additional borrowing and with debt repayments this year, the City’s forecasted principal amount of outstanding debt will be $60,751,637 on Dec. 31, 2019. This will be a reduction in debt of $15,191 compared to the end of last year. Mayor Denis Perrault felt it will be a positive outcome that the City’s debt will still be close to what it is now after the additional borrowing.
“At the end of this year, we're looking even with this added, we'll still come out very close to exactly where we are today,” he told the meeting. “That's a good point to make, I think, and that's just because of the current portion of the long-term debt that we'll be making. As well, we are in a growth period and we're trying very hard to be ready for that growth and also to be very responsible in the infrastructure dollars that we're trying to put forward.”
He added that this amount for which council will be considering a borrowing bylaw has not changed from the original amount that the City anticipated will have to be borrowed when the 2019 budget was announced in December.
The City's General Manager of Corporate Services Kathy Hopfner said this borrowed amount is fully funded in the 2019 budget, and no future tax increase will therefore be required to fund this additional debt.
“The water/wastewater utility debt is funded through water rates and they were increased two per cent on Jan. 1,” she mentioned after the meeting. “Then with the general operating budget, the overall tax increase is 2.9 per cent and 1.6 per cent of the 2.9 of the tax increase will be used to pay the principal and interest debt on the new borrowings.”
The new debt will be paid off over either a 10-year or 20-year period, but in most cases the financing term will be for 20 years.
“The maximum amount of time that we have, the borrowing term, is 20 years,” she said. “What we do is we borrow based on the life of the asset. So if you see some 10year borrowing there, that's usually per equipment and our equipment replacement is usually in 10 years.”
The largest portion of the borrowed funds – an amount of $3,690,856 – will be allocated to capital projects under general government. The projects funded under general government are the rehabilitation the historic CPR weir, Chinook Parkway development, flood mitigation, the City’s asset management initiative, the service centre roof replacement, storm sewer replacement along 1st Avenue NE from Chaplin Street to Cheadle Street, the rehabilitation of the intersection at the corner of Chaplin Street and 1st Avenue NW, the rehabilitation of paved streets, sidewalks and curbing, and the purchase of a new electric ice resurfacer.
The remaining $1,303,021 in borrowed money will be used to fund capital projects under the water and wastewater utility fund.
An amount of $893,021 will fund water distribution projects, $320,000 will be used for wastewater treatment projects, and $90,000 will fund wastewater collection projects.
The individual projects to be funded are the continuation of the biosolids management program, improvements to the South Hill pressure zone, the South Hill reservoir upgrade, improvements to downtown intersections, upgrading the bulk water station truck fill system, upgrading filter headworks piping to improve flow to filters, the installing of an actiflo clarifiers air scour system, and the funding of rehab programs for hydrants, water valves, and sanitary manholes.